July 3, 2022

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Withdrawals of the Tether (USDT) stablecoin exceed $10 billion

Withdrawals of the Tether (USDT) stablecoin exceed $10 billion

Tether claims that its dollar-pegged token is “fully backed.”

Justin Thales | Afp | Getty Images

Investors grabbed more than $10 billion from Rope The past two weeks have come amid increased regulatory scrutiny on stablecoins.

Tether, the world’s largest stablecoin, has seen its circulating supply drop from $84.2 billion on May 11 to about $73.3 billion as of Monday, according to data from CoinGecko. About $1 billion was withdrawn late Friday night.

The cryptocurrency, which is supposed to be pegged to the US dollar, temporarily dropped as much as 95 cents on May 12 after another type of stablecoin, terraUSD – or UST – Dropped much less than 1 dollar. This led to the sale of the Luna token associated with the Earth’s vaults, which in turn wiped out more than $40 billion from the wealth of its holders.

The fallout from the collapse of Terra, the blockchain behind UST and Luna, sent shock waves into the cryptocurrency market, with bitcoin and other cryptocurrencies plummeting. This is causing concern for regulators.

“Whenever there is a crypto failure or disaster, the fear is always that someone will misread the situation and correct a situation that is not beneficial to the entire community,” said Kathleen Breitman, co-founder of Tezos Blockchain. CNBC.

“As much as I enjoy seeing pointless things fail, there is always a tinge of admiration, ‘Will people conclude from this that all stablecoin is unsound?’ “This is always the great fear.”

Unlike rope, floor lockers were not backed by paper currency held in reserve. Instead, it relied on some complex engineering where price stability was maintained through the destruction and construction of the underground reservoirs and the sister symbol of Luna. Investors were drawn to the promise of 20% savings from Anchor, Terra’s main lending platform, a rate many investors said was unsustainable.

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Terra creator Do Kwon has also raised billions of dollars Bitcoin And other tokens through the Luna Foundation Guard chest, but Almost all the money has been used up In a futile attempt to save the ground tanks.

However, the panic over underground treasuries has drawn attention to another stablecoin – Cord in particular.

Regulators and economists have long questioned whether Tether has enough assets in its reserves to justify its purported stablecoin link to the dollar.

The company previously claimed that the rope was backed by dollars in a bank account, but later revealed it was using other assets including commercial paper — short-term corporate debt — and even digital tokens as collateral after settlement With the Attorney General of New York.

Last week, Tether said it Reduce the amount of commercial papers you own And increased its holdings of US Treasury bills. For the first time, the British Virgin Islands-based company said it had some foreign government debt. Tether declined to comment further on the source of its funds, but said it is pursuing a more thorough audit of its reserves.